Commercial paper defaults in China double in February amid real estate crisis

SHANGHAI, March 4 (Reuters) – The number of Chinese companies “constantly late” on commercial paper payments more than doubled in February from a month earlier as China’s property sector continued to struggle with a liquidity crunch .

A total of 1,184 companies were late on at least three commercial paper payments during the six-month period from September 1, 2021 to February 28, 2022, or had late payments in February, according to a list published on the Shanghai Commercial Paper Exchange website.

This compared to 562 companies on a list published at the end of January.

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The February list included a number of companies linked to developer Shimao Group (0813.HK), which on Thursday had its credit rating downgraded to “CCC” by Fitch Ratings due to rising refinancing risks.

It also included group companies Fantasia Holdings (1777.HK), which in December secured a bond maturity extension, as well as the electric car business of embattled developer China Evergrande Group (3333.HK) , China Evergrande New Energy Vehicle Group. (0708.HK)

Beijing has stepped up efforts to stabilize and tighten control over its economically critical real estate sector, which has been devastated by the Evergrande debt crisis.

Developers Country Garden (2007.HK) and Midea Real Estate (3990.HK) said on Thursday evening that they had secured separate financing facilities for mergers and acquisitions (M&A) with China Merchants Bank (600036.SS) with a total value of 21 billion yuan. Read more

China’s commercial paper market has come under intense scrutiny in 2021, with regulators demanding greater disclosure amid efforts to curb rising debt in the real estate sector. Read more

Commercial paper, which is not considered interest-bearing debt, is commonly used in the real estate industry as debt that promises suppliers future payment on a fixed date, usually within a year, but is increasingly become a source of funding for locked-out developers. other funding channels.

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Reporting by Andrew Galbraith; edited by Richard Pullin

Our standards: The Thomson Reuters Trust Principles.

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